Montalto said the balancing act would include readjusting growth forecasts, the political backdrop of the Mangaung ANC elective conference in December and both investor and rating agency concentration on this event, its policy and fiscal implications. Then there are also the recent downgrades, and defending the treasury's credibility.

He said although the recent downgrades were not on fiscal policy itself, the need to both keep it that way and show that the national treasury still has full control of the budget making process is key.

"We think the MTBPS will be a warning shot over the bows of the rating agencies, markets and the Tripartite Alliance members (and leadership) that the national treasury's credibility is to be defended and fiscal policy is not to be part of the Mangaung 'madness'," said Montalto.

He said the mood is clear with Gordhan already laying down the rhetoric of belt-tightening, a need to do away with vanity projects and cut more waste from expenditure as well as improve revenue collection.

On treasury's credibility and Mangaung, Montalto said Nomura in general and over time has seen the treasury "had always been – ex-post – credible and conservative, even if – ex-ante – we have concerns and there are large risks".

"However, Mangaung is a key risk, unlike in 2009 with Polokwane.

"Back then there was a very definite rejection of (former president Thabo) Mbeki's policies and a very definite turn towards (President Jacob) Zuma, which meant that whilst there was a shift to the left in emphasis and focus of the government, the shift in actually policy didn't actually have to be that dramatic to get him elected as head of the ANC.

"However, now with both the renteer-state/tenderpreneur culture even more entrenched and with the unions losing power amongst their members, they will seek policy payoffs in our view from Zuma as a condition of having now backed him in order to try and shore up their membership.

"As such, we think Zuma will naturally have, behind the scenes at least, somewhat more of a fight to maximise his re-election prospects – not wanting to repeat the mistakes of Mbeki's complacency.

"Of course, as ever this does not mean a massive blow out of the budget or indeed a markedly higher debt profile but in our view it means a slow grind wider in the debt level.

"Gordhan's warning shot to the ANC then is not in our minds so much to prevent fiscal slippage post Mangaung but to minimise its scope, especially in the context of the serious message he has been pushing to the wider ANC leadership on the consequences of the recent downgrades," said Montalto.

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